Federal Judge Dismisses Home Depot’s ERISA Lawsuit

A federal judge has dismissed a lawsuit accusing Home Depot of mismanaging forfeited retirement plan funds, finding no breach of fiduciary duty or violations of the Employee Retirement Income Security Act — and refusing to grant the plaintiff an opportunity to refile. 

 The ruling adds to a growing body of case law rejecting similar claims nationwide, although plaintiffs have secured a handful of recent victories.  

The lawsuit was filed a year ago by Guadalupe Cano, a participant in the Home Depot FutureBuilder Plan, on behalf of a proposed class of participants and beneficiaries. Cano sued Home Depot and the plan’s administrative committee, alleging breach of fiduciary duty under ERISA, violation of ERISA’s anti-inurement provision and engaging in prohibited transactions. 

Like in many recent cases, core to Cano’s complaint was the accusation that Home Depot “consistently failed to use the forfeited funds to pay plan administrative expenses and thereby reduce or eliminate the amounts charged to the participants’ individual accounts to cover such expenses.” 

Cano further asserted that Home Depot did not “investigate whether there was a risk that Home Depot would default on its matching contribution obligation if forfeitures were used to pay plan expenses,” nor whether the funds could “have eliminated plan expenses while still offsetting a portion of the company’s own contribution obligations,” or seek advice from “an independent, non-conflicted decisionmaker.” 

According to Cano, plan contributions were reduced by more than $3.9 million in 2018 due to this practice, followed by $4.2 million in 2019; about $4.6 million in 2020; $7.3 million in 2021; and $5.6 million in 2022. 

U.S. District Judge Tiffany R. Johnson in the U.S. District Court for the Northern District of Georgia characterized Cano’s claims as “novel but not new,” observing that similar suits have been filed nationwide challenging the use of forfeited funds under ERISA. 

Johnson emphasized the distinction between fiduciary and settlor roles carried out by plan sponsors, stating that courts have consistently held how plan sponsors choose to use forfeitures are settlor functions. Still, she acknowledged that “construing all inferences in Cano’s favor, it is plausibly alleged that the company acted as a fiduciary” and agreed that the forfeitures were plan assets. 

Despite that finding, Johnson ruled that Cano’s arguments failed to establish a fiduciary breach.  

The judge explained that Home Depot’s actions aligned with the plan’s terms, which allowed Home Depot to choose between using forfeited funds for the purpose of offsetting administrative costs or paying contributions to other accounts.  

The Department of Labor recently favored employers in plan forfeiture cases, but district courts have continued to issue decisions in favor of both plan sponsors and plan participants.

Johnson also dismissed Cano’s anti-inurement claim. Similarly, she rejected the prohibited transaction allegations and denied Cano’s request to amend and refile her complaint.

The Home Depot FutureBuilder Plan had 446,735 plan participants with more than $14 billion in assets in 2024, according to its most recent Form 5500 filing.